Illustration: Aïda Amer/Axios
ROVINJ, CROATIA — Streaming giants looking to grow overseas are shelling out billions to local content producers, fueling a new production economy all over the world.
Why it matters: Companies like Amazon and Netflix need local languages and storylines that are native to the regions where they need to win over subscription budgets. They can't do that from Hollywood.
- Content creators — particularly those who want to create in their native language — are the big winners here, since they'll no longer need to play by the rules of Hollywood in order to get access to big audiences.
The rush to create localized content is being felt particularly in countries like Croatia, Serbia, and other parts of what was formerly Yugoslavia.
- That area, once a bastion for Hollywood film production prior to the Yugoslav Wars, still has resources and expertise in production that new Hollywood giants are flocking to, says Nebojša Taraba, a Croatian producer whose hit Croatian TV series "The Paper,” was acquired by Netflix last year and became a global success.
- Taraba's production company, Drugi Plan, is also began producing the first Croatian series for HBO Adria, called “Success."
- HBO came to the region in 2016 when its European arm launched HBO Adria, a premium cable channel serving countries like Croatia, Slovenia, Serbia, Bulgaria, and Macedonia.
Driving the news: The promise of local content investment was the center of focus at "The Weekend" Media Festival in Croatia this past weekend, where thousands of producers, editors and media professionals from the region gathered to talk about streaming and local content.
- "The demand is so high that we are running out of carpenters to build sets, let alone actors and producers" one producer told me.
- Taraba was at the festival with representatives from Munich-based production company Beta Film Group to produce a series about refugee and drug trafficking at eastern European border for a film called "Amnesia."
- "Their coming here is great news for the whole region, fantastic opportunity and could create great move forward and great content as well," says Taraba.
Yes, but: The influx of cash to the region isn't occurring without some drama. Local telecom companies and networks are struggling to compete with the influx of money being poured into rival companies by outside groups and private equity giants.
- "We are in good position on local content," said Aleksandra Subotić, CEO United Media, of one the biggest telecom providers in the Balkans, which was until recently majority owned by private equity firm KKR and is now majority owned by UK-based private equity group BC Partners.
- "I'm talking about hundreds of thousands of euros worth of investment," she said on a panel at the festival. "We observed that local content was in high demand. That's why we started production and we are proud of our grand production in the region."
- "But you do not follow all of the regulations in the region!" snapped back Vladimir Lucic, the Chief Marketing officer of Serbian telecom company Telekom Srbija.
- "Telecom was stagnant in the region but times are better and we started progressing. We're mobilize talent in region because these budgets are high and we are faced with an insufficient number of actors in the region," said Lucic.
Be smart: The popularity of shows shot in the region, like Game of Thrones, has further lured Hollywood giants to the area.
- Large tax incentives — as well as scenic backdrops and cheap labor — also help drive interest of Hollywood heavyweights to the region.
- "You can hire one electrician in Los Angeles for the cost of three or four electricians in here," one producer told me.
The big picture: Regions all over the world are experiencing similar demand.
- In Latin America, former Univision Chief Content Officer Isaac Lee and several of his former colleagues have launched Exile Content, a Mexico City-based production company that's producing content for big streamers in Latin America and Spain.
- "Exile’s plan is to be the premium content studio for Latin America, Spain and multicultural US, and is working with Endeavor Content and top talent in the region in executing that plan," says Lee.
Between the lines: In the past, U.S. studios exported American content to global markets because local markets didn't have the investment or resources to create local hits that could go on to become global phenomenons.
- The need for major streaming services to grow their subscriber bases internationally is changing that, fast.
Go deeper: Netflix, the cultural exporter